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Monday, August 2, 2021

Market Update 8/2 - futures pointing to a green open, as predicted last week

I finally got my 4th monitor back, over the weekend - after lending it out.... - and having 4 monitors working makes it a heck of a lot easier for me to blog in the morning.

This morning we're seeing money being put to work on the first Monday of the month, and that was an easy thing to predict. See last weeks blog for that call. 

Not that I want to chase the broader market, at this late stage in the game, as I most recently pointed out on my linkedin feed.   

$SPX - "this phony bull market's days are numbered". 

I don't even like the $SPX short term!

 SPX - 60 min chart. Trading into a little upturned triangle pattern. You can see the right shoulder being sold - at 4422 - and once it breaks out above that level the next stop is a slightly higher high, at the top of the pattern. 

 Looking for an alternative trade 

What has not been easy to predict is the direction of gold miners. This has to be the most difficult sector trades of all, and countless fortunes have been lost to the 3X leveraged miner ETF's, and that's only a slight exaggeration! I can't think of a more difficult sector trade, but I think miners are over-due for a snap-back rally. I was long last week, but then I sold just ahead of Thursday's rally. DOH!  

$GDXJ (Junior Gold Miners) This is a complicated chart, but the moving averages tell a story. See the annotations. 

Last week I noticed the Jr. Gold miner fund was driven above the 20 day moving average, leaving an (bullish) abandoned island pattern behind. I've also seen several hedge funds pumping the gold miner trade over the past few weeks. I think either they were a little early, or the bounce we saw last week, was more of an (rigged) bullish options trade?  

I'm not encouraging anyone to trade gold miners, just providing my analysis of the chart. 

1. Always watch the calendar. 

2. Moving averages (20, 50, 200)

China - seems like everyone is bearish China after last weeks little washout, so I'm bullish. 

Notice how China sells off for months, and nobody seems to notice, but as soon as someone panics out of the China trade, that's all you hear about? That's the same kind of hype we see around covid. The news media didn't pay much attention, until the market crashed, then everyone got bearish, at just the wrong time. 

$IQ - Watching the 11.50 area on the China internet technology chart. 

Looking at the long term trend on the $FXI (China) - there's a possibility that we see another washout, but it's already back above support, and the trend is higher. 

That's about it. It's a pretty dull market, but we see an August swoon. It's hard to recommend shorting it here, but let the $VIX be your guide. $VIX above 18 = sell. $VIX below 18 = don't sell.

Res. on the $VIX is 24, and a breakout above that level will trigger more selling.   

Later, AA 

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